The objective of this study is to assess the validity of a new hypothesis of inert gas narcosis. This hypothesis suggests that the anesthetic potency of metabolically inert gases is due to their effect on the "free volume" of a bulk lipid phase, possibly in the neuronal membrane. More specifically, according to this hypothesis, narcosis is induced when the inert gas dissolved in the lipid phase causes the free volume to exceed a "threshold" value. The new hypothesis provides a quantitative relation between the anesthetic potency of inert gases and their lipid solubility. This relation is an expression of the well-known Meyer-Overton hypothesis, which is shown to be a special case of the free-volume model. The model also predicts: (a) the dependence of the (relative) anesthetic potency of a gas on temperature, (b) the narcotic effects of inert gas mixtures, (c) the pressure reversal of inert gas narcosis, and (d) an apparently yet unobserved temperature reversal of inert gas narcosis. The experimental and theoretical studies performed during the first eleven months of the project are summarized in the following report. Critical parameters in the free-volume relations are being determined by means of diffusivity and solubility measurements with gaseous anesthetics in selected lipid systems. These parameters will permit a direct comparison of the predictions of the free-volume model with clinical results. Future work required to meet the objective stated above is also outlined. It is believed that the free-volume model, if its validity is confirmed, will provide a new insight in the mechanism of general anesthesia. It may also find biomedical applications, as well as prove useful in the development of advanced diving and deep submergence techniques.